The city of Grand Rapids Assessor’s Office said last week it estimates 1,700 eligible businesses located within the city failed to file for the personal property tax exemption by the state-mandated Feb. 10 deadline.
Now those businesses have until March 20 to file for a personal property appeal to the city’s Board of Review. If they don’t, they will be subject to the 2014 personal property tax.
An eligible business may have no more than $80,000 worth of personal property in true cash value. Receiving the exemption could possibly save a commercial business about $1,500, based on last year’s tax rate. There is a separate rate for industrial businesses, and last year an industrial small business paid about $1,000 tax on $80,000 worth of personal property. Most of the small businesses in Grand Rapids are commercial, however, as opposed to industrial.
Grand Rapids Assessor Scott Engerson said 1,700 businesses is about half of those estimated to be eligible under the new state law. The city did a news media campaign in January to alert city businesses of the tax break, and the 2014 personal property filing notifications that went to businesses in January included a notice of the new exemption “on a separate, colored sheet of paper to bring it to their attention,” said Engerson.
“Human nature always comes into play in these,” said Engerson. “Small business owners are very busy running their businesses, and it’s not uncommon, I would think, to miss a deadline.”
He said a targeted mailing is also going to individual businesses that may not have filed by the Feb. 10 deadline.
“We’re taking whatever measures we deem reasonable to try and get the word out so that those businesses that are eligible get the benefit,” said Engerson.
The Business Journal ran a story about the tax exemption and the Feb. 10 deadline on Jan. 21. City Treasurer Al Mooney said then he feared some small businesses wouldn’t get the word in time just because the exemption was so new.
The tax on business-owned personal property has long been a sore spot in Michigan’s business circles, especially among the major industrial companies because of the high-dollar values of much high-tech manufacturing and processing machinery. Legislation whittling away at the PPT was passed in 2012 and 2013, part of the legacy of Gov. Rick Snyder’s administration, which led the move to gut the Michigan business taxes after he was elected.
A ballot question at the Aug. 5 primary election in Michigan could finally end the personal property tax on industry, and also enact a partial replacement source for the PPT revenue that Michigan counties, municipalities, school districts and libraries rely on.
Cathy Lambert, a Troy CPA who is an expert on the PPT, said the exemption for small business will only happen once if the ballot proposal fails in August. And if it does pass, it will only end the PPT on industrial companies over a phase-out period lasting eight to 10 years. Commercial businesses with more than $80,000 worth of personal property will still be subject to the PPT, in either case.
As of Dec. 31, Public Act 153 of 2013 provides for the exemption of eligible commercial and industrial personal property with a combined true cash value of less than $80,000 — but Engerson notes it is not automatic; as spelled out in the law, the small business owner must file for the exemption.
An eligible business that does not file for the exemption (or ignores the appeals process in March), and also does not file a 2014 personal property statement, will have to pay the PPT. Engerson said the local assessor would be required to put an estimated assessment on that business’s personal property, “even if the estimated assessment is below the $80,000 true cash value.”
The law requires an eligible business with personal property to claim the exemption no later than Feb. 10 in each tax year — if the exemption is extended beyond 2014 by the voters in August. The annual affidavit is filed with the local tax collecting unit.
Property owners who file the affidavit are not required to file the personal property statement as they have in the past.
The Grand Rapids assessor’s office said the Board of Review petitions (Form 618) and exemption affidavits (Form 5076) are available online at the Michigan Department of Treasury website or on the city assessor’s website.
The deadline for filing a personal property appeal to the city of Grand Rapids Board of Review is March 20. A completed board of review petition and a completed affidavit are both required. Petitions and affidavits must be received in the assessor’s office no later than 5 p.m., March 20. Forms submitted by fax or other electronic media are not accepted.